Cash flows from financing activities do not include

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1. Cash flows from financing activities do not
include:

A) cash received from issuing preferred stock.

B) cash paid for treasury stock.

C) declaration of a cash dividend.

D) repayment of a bank loan.

2.Which of the following is not reported as an
adjustment to net income when using the indirect method of
computing net cash flows from operating activities?

A) Cash dividends paid.

B) A change in accounts receivable.

C) Depreciation.

D) A change in a prepaid expense.

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Answer

Answer
1

C) declaration of a cash dividend

Explanation:

Declaration of cash dividend does not result in cash
outflow.

It results in current liability.

Hence, it is not included in Financing activities

Payment of dividend will be included in Financing
activities.

Answer
2

A) Cash dividends paid.

Explanation:

Cash Dividend paid is shown in Financing activity and is not
shown in Operating activity.

Dividend declared is shown as adjustment in operating
activities.

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